As part of its plan for a Green Industrial Revolution, the Government has pledged to ban the sale of petrol and diesel cars and vans by 2030, with all vehicles required to be 100 per cent emissions free by 2035.
Reaching this target will require creative thinking and partnerships between businesses that share a vision of a cleaner, greener future. One such example is Infracapital, who committed to invest £150 million in battery storage and electric vehicle infrastructure company Zenobē in November 2020.
The investment will play a significant role in delivering clean and reliable electric vehicle and battery storage solutions with a strong environmental purpose. For Infracapital, the investment aligns with its strategy to build, deliver and operate essential and sustainable greenfield infrastructure across Europe.
Investment in the green mobility sector is really needed to achieve our broader net zero goals.
Deloitte’s director of infrastructure debt and capital advisory
Investment in green mobility
With around 10 per cent of cars in the UK now electric, collaboration across sectors and industries will be vital to meet the goal for zero emission vehicles set out in the government’s plan.
“Investment in the green mobility sector is really needed to achieve our broader net zero goals,” said Priya Veerapen, Deloitte’s director of infrastructure debt and capital advisory, and part of the team that advised Infracapital on its investment.
“We are now seeing a growing interest in transactions focused on decarbonisation, energy transition and green mobility.”
A crucial element
With Environmental, Social and Governance (ESG) moving from being an important element to a crucial one - both within and in driving M&A - companies and investors are finding that markets are changing in response.
“Through our work with businesses across different sectors and industries on green investments, we are now seeing the market recognise the need to fully embrace ESG,” said Deloitte’s head of real assets debt and capital advisory, Phil Adam.
“Corporates are scrutinising the sustainability of their businesses and supply chains and borrowers are acutely aware that, to attract capital to cover their investment needs, they must improve and demonstrate their sustainability credentials.
“Increasingly, markets are assigning a valuation to businesses that are seen to be doing the right thing in the right sectors, opening a new dimension of measurement – both for social or environmental impact investments and more traditional M&A investments,” said Susana Costa, Deloitte’s director of transaction services, who focuses on assessing ESG impact on M&A.
“ESG is not only driving investment opportunities,” Phil added, “but also a need to understand and get comfortable with new technologies and new business plans.
“This theme is now firmly embedded in the capital markets and will be a driver for change for years to come.”
The forefront of the energy transition
In addition to our work with Zenobē, Deloitte has helped a number of businesses with energy transition and integrating renewables, including battery storage and electricity interconnection.
This has involved helping them to understand these assets, including key value drivers and risks, identifying investment opportunities and executing them from an M&A perspective.
We have also advised the Department for Business, Energy and Industrial Strategy and the Office of Low Emission Vehicles on establishing a Rapid Charging Fund, with the ambition of accelerating the extent of electric vehicle charging infrastructure in the UK.
Aligning green ambitions
With a vision of making green energy more accessible, in the UK and internationally, one of Zenobē’s aims is overcoming the challenges of intermittent renewables – this refers to energy sources like solar and wind that, due to the fluctuations in supply, are not entirely predictable.
To help make renewable electricity more consistent and easier to manage, Zenobē is using larger ‘grid-scale’ batteries that can store the energy and discharge it when needed. As it owns and operates a third of the UK’s electric bus fleet, another of the company’s big goals is electrifying diesel vehicles.
Infracapital’s alignment with these aims of supporting a decarbonised economy made the opportunity to invest in a growing business focused on energy transition with international potential a good fit. Its own priorities include delivering and operating essential and sustainable infrastructure across Europe.
Corporates are scrutinising the sustainability of their businesses and supply chains and borrowers are acutely aware that, to attract capital to cover their investment needs, they must improve and demonstrate their sustainability credentials.
Deloitte’s head of real assets debt and capital advisory
The race to net zero
Since the Government’s green ambition was launched in November 2020, work to transform how we travel in the UK has gathered pace.
Important areas for development include creating better infrastructure for charging and network capacity. Strengthening the supply chain will also be vital to give people the confidence to invest in electric fleets and vehicles.
“The costs of transformation are in the billions,” said Priya, “as a lot of it has to come from private investors and companies.
“Advising investors and finding the right businesses to partner up is one important contribution we can make.”
Public investment of over £1.8 billion to support greener journeys joins private pledges of up to £1 billion to support the electrification of UK vehicles and their supply chains. This will include work to develop giga-factories in the UK to produce the batteries needed at scale. Alongside this, £1.3 billion of private investment will support the roll-out of charging infrastructure.
Accelerating the shift to zero emission vehicles could support about 40,000 new jobs in 2030 and around £3 billion of private investment by 2026. It could also save approximately 300 million tonnes of carbon dioxide equivalent by 2050.